How to dodge new checking fees

The exorbitant fees that federal regulations recently beat down are back again -- under the guise of account maintenance charges -- at many of the nation's largest banks, making free checking an endangered species.

But, in many cases, you can still dodge the fees.

There are a dizzying number of ways to "earn" free checking through account minimums, monthly direct deposit activity, credit card transactions, combined bank balance and/or using the bank's investment advisers.

Here are some examples:

Chase began the year by rolling out its Total Checking account for new customers that comes with a $12 monthly fee.

Dodge this fee -- Keep your checking free by maintaining a $1,500 daily balance or $5,000 in total deposits with the bank.

Either of those options ties up a lot of earning power, so your best bet to keep free checking might be to authorize one direct deposit, such as a paycheck, of $500 or more. Caution: it has to be one deposit, not two or three smaller ones, and it must be an ACH (automated clearing house) transaction.

Bank of America similarly announced that it will roll out its new four-tiered checking account structure by year's end with new monthly fees ranging from $8.95 to $25.

Dodge this fee -- While full fee-waiving details are yet to come, you'll be able to avoid the $8.95 fee for its eBanking account as long as you choose online statements and make all transactions online or through an ATM.

Citibank already jacked up its checking account fees last fall, with monthly maintenance charges of between $8 and $20.

Dodge this fee -- To avoid the $8 Basic Checking account fee, it might be handy to carry an accountant with you, as it requires a combination of five of the following: direct deposit, debit card purchase, bill pay, auto deduction, ACH payment, checks paid or ATM cash withdrawal. And this was supposed to help avoid the fee!

Wells Fargo abandoned free checking last summer in favor of five account classes with monthly fees ranging from $5 to $30.

Dodge this fee -- To avoid the $5 Value Checking fee, you'll need to sign up for direct deposit of $250 or more per month or maintain a $1,500 account balance. There's also a $100 deposit to open this account.

If your banking needs are minimal, you don't require face time with an actual human and you're savvy enough to avoid fee-generating behavior, you can always bank fee-free with any number of online banks.

The industry's misery trend follows a year of financial reform that eliminated or severely curtailed some of banking's most blatantly abusive – and lucrative – fees and penalties, including overdraft fees, over-limit interest rate hikes and the interchange fees that banks charge retailers every time you swipe your debit card.

Celent, a financial services consulting firm, estimates that it costs banks $250-$300 annually to maintain one of the nation's roughly 200 million checking accounts. Industry analysts predict the reforms could cost the nation's 26 largest banks a combined $21 billion this year alone.

In addition to instituting new checking account fees to recoup their losses, some less-obvious pick-pocketing is afoot at the big banks these days.

TD Bank recently instituted a $1 monthly fee for paper statements. Wells Fargo now charges $2 to receive images of cancelled checks with your paper statement and a $10 fee every time you use your savings account to cover an overdraft. A bank is just as likely to charge for online banking as it is for offline statements these days.

Tony Plath, finance professor at the University of North Carolina-Charlotte, finds Bank of America's new tiered checking structure particularly amusing.

"I love that new 'eBanking' tier where they say, 'Oh, we'll let you bank here and we won't charge you anything, just never come into our branches or call us. Don't bother us,'" he chuckles. "'We're not going to send you a statement, we don't want you in our branches and we don't want you talking to our employees; we'd love to have you as a customer!'"

In truth, Plath says, the major banks are taking this opportunity to shed the very customers to which they can no longer charge punishing fees on a regular basis.

"Banks could only afford to offer 100 percent of their customers free checking because 15 percent of their customers subsidized that; they paid the freight (in fees) for everybody else. With the new reform legislation, that doesn't work anymore," Plath says. "Now what they're trying to do is sell enough bank products into a household to get a positive profit stream – and if they don't, drive the customer out of the bank. That's what BofA is doing; make us some money or leave."

It's a trend Plath predicts will continue until market conditions force banks to once again compete for customers by offering free checking.

"It's going to drive a lot of people out of the consumer banking industry, and the people who are going to leave will be the most fragile customers that are marginally banked today," he says. "I mean, look at their service charges: $9 a month is not cheap for a lot of people. I wouldn't pay that for a checking account."